Pseudonym v. Wachovia Mortgage Corporation

Appellant's Brief to the Dallas Court of Appeals

In a divorce case, the trial court awarded the marital residence to the wife. Wachovia held a lien on the residence resulting from a home equity loan taken out during marriage by the husband without the wife's knowledge. After divorce, the ex-wife sued Wachovia to remove the cloud on her title and to quiet title because the Texas Constitution requires both spouses to consent to a home-equity loan.

The Texas Constitution's home-equity loan provisions include some violations that can be "cured." For example, the fees incurred in taking out a home-equity loan may not exceed 3% of the amount of the loan. If a borrower complains to the lender, the lender may "cure" the defect by reimbursing funds to the borrower.

A borrower's claims against a lender are not subject to any specific statute of limitations. In the first case to address limitations and Texas home-equity loans, Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834 (Tex. App. - Dallas 2008, no pet.), the parties agreed that Texas' residual four-year statute of limitations applied. Many other courts later invoked the four-year statute to bar borrowers' claims, stating that Rivera held that the four-year statute applied. However, some of these courts held that there is no statute of limitations on a suit to remove a cloud on title and to quiet title.

The divorce in this case took several years to conclude. When the ex-wife sued Wachovia, more than four years had passed since the ex-husband took out the home-equity loan. The ex-wife lost in the trial court on a summary judgment based primarily on limitations and secondarily on the contention that the ex-wife had ratified the home-equity loan.

This brief, filed by the ex-wife, argues (a) that a suit to remove a cloud on title and to quiet title cannot be barred by limitations; (b) that if it can, the four-year statute should apply only to "curable" violations of the home-equity loan provisions of the Texas Constitution, and not to incurable ones such as, in this case, the failure to obtain consent to the loan from both husband and wife; (c) that liens based on home-equity loans cannot be estopped or ratified into existence; and (d) that the summary judgment evidence was inadequate to show any estoppel or ratification of the home-equity loan by the ex-wife.

05-12-00038-CV IN THE FIFTH COURT OF APPEALS AT DALLAS, TEXAS GILLIAN SMITH PHILLIPS V. WACHOVIA MORTGAGE CORP. and ANTONIO ROBERT PHILLIPS BRIEF OF APPELLANT, GILLIAN SMITH PHILLIPS Appeal from the 254th Judicial District Court of Dallas County, Texas, Hon. Curt B. Henderson, Presiding Jimmy L. Verner, Jr. Texas Bar No. 20549490 Verner & Brumley, P.C. 3710 Rawlins St. Suite 900 Dallas, Texas 75219 214.526.5234 214.526.0957.fax Attorney for Appellant, Gillian Smith Phillips Oral Argument RequestedNote to JDSupra readers: Certain personal information about persons involved has been redacted to help preserve privacy. Accordingly, page numbers might not be correct. Additionally, the Appendix is omitted. IDENTITY OF PARTIES & COUNSEL Appellant: Gilliam Smith Phillips Appellees: Wachovia Mortgage Corp. Antonio Robert Phillips Trial counsel for Appellant: Keith D. Becker Texas Bar No. 02015740 4807 Gaston Ave Dallas, Texas 75246-1020 Appellate counsel for Appellant: Jimmy L. Verner, Jr. Verner & Brumley, P.C. 3710 Rawlins St. Suite 900 Dallas, Texas 75219 Counsel for Appellee John M. Ledyard Wachovia Mortgage Corp. 600 E. John Carpenter Frwy. Suite 125 Irving, Texas 75062 Counsel for Appellee Clint Westhoff Antonio Robert Phillips GoransonBain 8150 N. Central Expressway Suite 1850 Dallas, TX 75206 Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page iTABLE OF CONTENTS Identity of Parties & Counsel...............................................................................i Table of Contents..................................................................................................ii Index of Authorities..............................................................................................v Statement of the Case.........................................................................................ix Issues Presented...................................................................................................x Statement of Facts................................................................................................1 Summary of Argument.........................................................................................8 Argument...............................................................................................................9 Issue 1: The four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien because an equitable proceeding to remove cloud on title and to quiet title is not subject to limitations when a deed is void...............................9 Issue 2: Alternatively, the four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien that is incurable under the “cure” provisions Article 15, Section 50(a)(6)(Q) of the Texas Constitution, although the residual four-year statute of limitations does apply if the void home equity lien can be cured under Article 15, Section 50(a)(6)(Q).........................................................9 Issue 3: The trial court erred by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page iititle and to quiet title when title to a homestead is clouded by a void home equity lien because a void home equity lien cannot be “estopped” or “ratified” into existence....................................18 Issue 4: Alternatively, the trial court abused its discretion by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on title and to quiet title because the summary judgment evidence does not support a finding of judicial estoppel or ratification..............................................................................22 Prayer for Relief..................................................................................................27 Certificate of Service...........................................................................................28 Appendix: A. Final Order, signed December 17, 2011. B. Plaintiff's First Amended Original Petition to Remove Cloud on Title and to Quiet Title, filed January 25, 2009. C. Memorandum, signed October 24, 2011. D. Excerpts from Ms. Smith Phillips' summary judgment evidence: 1. Affidavit signed January 20, 2009; 2. Affidavit signed November 17, 2009, with attached Reporter's Record; and 3. Affidavit signed September 30, 2011. E. Excerpts from Mr. Phillips' summary judgment evidence: Affidavit signed September 2, 2009, with attached Reporter's Record. F. Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834 (Tex. App. -Dallas 2008, no pet.) G. Santos v. CitiMortgage, Inc., Civil Action No. 3:11-CV-2592-M-BK (N.D. Tex. Mar. 29, 2012) Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page iiiH. Smith v. JPMorgan Chase Bank, N.A., 825 F. Supp. 2d 859 (S.D. Tex. 2011) I. Gulley v. Countrywide Home Loans, Inc., 436 B.R. 878 (Bankr. N.D. Tex. 2010) J. Chambers v. First United Bank & Trust Co., 419 B.R. 652 (Bankr. E.D. Tex. 2009) K. Tex. Const. art. XVI, § 50(a)(6)(Q) Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page ivINDEX OF AUTHORITIES Constitution Tex. Const. Art. XVI, § 50(a)(5)..........................................................................18 Tex. Const. Art. XVI, § 50(a)(6)(A)...............................................................10, 11 Tex. Const. Art. XVI, § 50(a)(6)(B)..........................................................10, 12-13 Tex. Const. Art. XVI, § 50(a)(6)(E).....................................................................11 Tex. Const. Art. XVI, § 50(a)(6)(Q).............................................11, 13, 15, 16, 17 Statutes Act of May 29, 2003, 78th Leg., R.S., S.J.R. No. 42, §1, 2003 Tex. Gen. Laws 6219, 6219........................................................................11 Tex. Civ. Prac. & Rem. Code § 16.051..........................................................12, 15 Tex. Fam. Code § 7.001.......................................................................................26 Cases Belanger v. BAC Home Loans Servicing, L.P., 2011 U.S. Dist. LEXIS 151554 (W.D. Tex. Dec. 9, 2011).............................................................13 Blodgett v. BAC Home Loans Servicing, L.P., 2012 U.S. Dist. LEXIS 1524 (E.D. Tex. Jan. 6, 2012).................................................................13 Boutari v. JP Morgan Chase Bank, N.A., 2010 U.S. Dist. LEXIS 144094 (W.D. Tex. June 10, 2010), aff'd mem. 429 Fed. Appx. 407; 2011 U.S. App. LEXIS 12539 (5th Cir. June 20, 2011) (per curiam)............................................................13, 16 Chambers v. Conaway, 883 S.W.2d 156 (Tex. 1993)............................................9 Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page vChambers v. First United Bank & Trust Co., 419 B.R. 652 (Bankr. E.D. Tex. 2009)......................................................................................20 City of Keller v. Wilson, 168 S.W.3d 807 (Tex. 2005)........................................17 Delgado v. Burns, 656 S.W.2d 428 (Tex. 1983)....................................................9 Doody v. Ameriquest Mort. Co., 49 S.W.3d 342 (Tex. 2001)........................17, 21 Ferguson v. Building Materials Corp., 295 S.W.3d 642 (Tex. 2009)...........23-24 Ford v. Exxon Mobil Chemical Co., 235 S.W.3d 615 (Tex. 2007)......................15 Gulley v. Countrywide Home Loans, Inc., 436 B.R. 878 (Bankr. N.D. Tex. 2010)......................................................................................20 Hannaway v. Deutsche Bank Nat'l Trust Co., 2011 U.S. Dist. LEXIS 24775 (W.D. Tex. Mar. 11, 2011)............................................................13 Hruska v. First State Bank of Deanville, 747 S.W.2d 783 (Tex. 1988).....................................................................................................18, 20 Jennings v. Burgess, 917 S.W.2d 790 (Tex. 1996)...............................................9 Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2002)....................................................................................................16 Johnson v. Deutsche Bank Nat'l Trust Co., 2010 U.S. Dist. LEXIS 126912 (S.D. Tex. Dec. 1, 2010).............................................................14 Jones v. Texas Gulf Sulphur Co., 397 S.W.2d 304 (Tex. Civ. App. -Houston 1965, writ ref'd n.r.e.)........................................................................19 Kepley v. Zachry, 116 S.W.2d 699 (Tex. 1938)...................................................20 Kunkel v. Kunkel, 515 S.W.2d 941 (Tex. Civ. App. -Amarillo 1974, writ ref'd n.r.e.)..........................................................................26 Lincoln v. Bennett, 156 S.W.2d 504 (Tex. 1941)................................................19 Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page viLong v. Knox, 155 Tex. 581, 291 S.W.2d 292 (Tex. 1956)..................................24 Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1 (Tex. 2008)....................................................................................24 Priester v. Long Beach Mortg. Co., 2011 U.S. Dist. LEXIS 142031 (E.D. Tex. Oct. 12, 2011)............................................................14 Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003).....................................................................................................17, 18 Reagan v. U.S. Bank Nat'l Ass'n, 2011 U.S. Dist. LEXIS 115873, at 8-9 (S.D. Tex. Oct. 6, 2011)...............................................................13 Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834 (Tex. App. -Dallas 2008, no pet.).......................................................................12 Santos v. CitiMortgage, Inc., 2012 U.S. Dist. LEXIS 43769 (N.D. Tex. Mar. 29, 2012), approving, in part, Findings and Recommendation of Magistrate Judge, 2012 U.S. Dist. LEXIS 43775 (Feb. 7, 2012)......................................................................14 Schanzle v. JPMC Specialty Mortg. LLC, 2011 Tex. App. LEXIS 1748, at 10 (Tex. App. -Austin Mar. 11, 2011, no pet.).........................13 Sierra v. Ocwen Loan Servicing, LLC, 2012 U.S. Dist. LEXIS 19448 (S.D. Tex. Feb. 16, 2012).............................................................14 Smith v. JPMorgan Chase Bank, N.A., 825 F. Supp. 2d 859 (S.D. Tex. 2011).............................................................................................14, 16 Southland Life Insurance Co. v. Vela, 147 Tex. 478, 217 S.W.2d 660 (1949)..................................................................................19, 20 Tenery v. Tenery, 932 S.W.2d 29 (Tex. 1996) (per curiam)................................26 Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304 (Tex. 1923)..............................15 Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page viiWatson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783 (Tex. 1941)........................15 Williams v. Deutsche Bank Nat'l Trust Co., 2011 U.S. Dist. LEXIS 24767 (W.D. Tex. Mar. 11, 2011)............................................................14 Rule Tex. R. Civ. P. 166a(c)..........................................................................................18 Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page viiiSTATEMENT OF THE CASE This appeal is from an interlocutory partial summary judgment made final after a trial. The partial summary judgment granted a First Amended Motion for Partial Summary Judgment against Plaintiff, based on limitations, judicial estoppel and ratification. The Hon. Curt B. Henderson, sitting by appointment as Judge of the 254th Judicial District Court of Dallas County, Texas, signed the Final Order on December 17, 2011. (Tab A). Appellant filed a Notice of Appeal December 29, 2011. The Court dismissed the appeal for want of prosecution by Judgment signed March 22, 2012, based on a failure to pay for the Clerk's Record. Appellant moved the Court to reinstate the appeal on March 26, 2012, on the ground that the Clerk's Record had neither been prepared nor billed to counsel for Appellant. By Order signed May 11, 2012, the Court denied Appellant's motion but reinstated the appeal on its own motion. Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page ixISSUES PRESENTED Issue 1: The four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien because an equitable proceeding to remove cloud on title and to quiet title is not subject to limitations when a deed is void. Issue 2: Alternatively, the four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien that is incurable under the “cure” provisions Article 15, Section 50(a)(6) (Q) of the Texas Constitution, although the residual four-year statute of limitations does apply if the void home equity lien can be cured under Article 15, Section 50(a)(6)(Q). Issue 3: The trial court erred by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien because a void home equity lien cannot be “estopped” or “ratified” into existence. Issue 4: Alternatively, the trial court abused its discretion by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on title and to quiet title because the summary judgment evidence does not support a finding of judicial estoppel or ratification. Appellant’s Brief – Phillips v. Wachovia Mortgage Corp. -page xSTATEMENT OF FACTS A. Introduction Appellant is Gillian Smith Phillips (“Ms. Smith Phillips”). Appellees are Wachovia Mortgage Corp. (“Wachovia”) and Antonio Robert Phillips (“Mr. Phillips”). The remaining three parties -Herring Trust, Myrtle Ann Smith and “Smith and Smith” Trust -were defaulted in the trial court and are not part of this appeal. (CR 288) (Tab A). This appeal arises out of the divorce of Mr. Phillips and Ms. Smith Phillips. Wachovia purports to hold a lien on the former marital residence -Ms. Smith Phillips' homestead -which the trial court awarded to Ms. Smith Phillips in the divorce. Ms. Smith Phillips contends that the lien is void, hence this lawsuit. The basic facts underlying this case are largely undisputed. They are set forth in excerpts from the parties' summary judgment evidence, most of which is collected in the Appendix under Tabs D and E. Tab D contains three affidavits submitted by Ms. Smith Phillips in response to the summary judgment evidence submitted by Wachovia and Mr. Phillips, dated January 20, 2009 (2nd Supp. CR 42); November 17, 2009 (2nd Supp. CR 78); and September 30, 2011 (1st Supp. CR 4). Tab E contains Mr. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 1Phillips' affidavit in support of the summary judgment motion. (CR 112). Mr. Phillips' affidavit is dated September 2, 2009. B. The Facts Although Mr. Phillips later denied it, he and Ms. Smith Phillips became married at common law by April 27, 1992. (CR 178, ¶¶ 5-6). The couple began living at 4444 Common Road, Dallas, Texas, which is the realty at issue in this appeal, in 1995. (2nd Supp. CR 42). The realty was titled in Mr. Phillips' name. On or about August 21, 2002, representing himself to be unmarried, Mr. Phillips took out a home equity loan on 4444 Common Road for $154,000 from World Savings Bank, FSB. (CR 112, ¶ 6; 114-43; 1st Supp. CR 28-29, ¶ 5). This loan paid off a prior encumbrance plus yielded Mr. Phillips $95,584.56 in cash. (CR 114-15, 144; 2nd Supp. CR 78, ¶ 6). Mr. Phillips did not tell Ms. Smith Phillips about the loan at the time. (CR 112, ¶ 6; 144; 2nd Supp. CR 43; 78, ¶ 6). Ms. Smith Phillips did not execute any of the loan paperwork (CR 114-43; 1st Supp. CR 28-29, ¶ 5; 29, ¶ 7; 33, ¶ 16; 2nd Supp. CR 78, ¶ 5) and never has consented to the lien on the homestead. (1st Supp. CR 28-29, ¶ 5; 29, ¶ 7; 33, ¶ 16; 2nd Supp. CR 42; 78, ¶ 5). She received no part of the proceeds of the loan. (CR 144; 2nd Supp. CR 43). Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 2Mr. Phillips told Ms. Smith Phillips about the home equity loan about a month later, after he had spent the proceeds of the loan. (CR 112, ¶ 6; 2nd Supp. CR 43; 78, ¶ 6). Ms. Smith Phillips then contacted World Savings Bank, FSB, about the loan: I did notify World Savings Bank of my marriage & failure to sign the required document(s) when I learned of the refinance. The bank requested documents reflecting my marital status. I sent the bank the documents they requested, the pleadings in the divorce case, affidavits of members of the community, etc. After the jury trial in March 2006 bifurcated on the issue of the marriage, a bank representative requested a copy of the completed Jury Charge. Unfortunately, in April 2006 before I could obtain a copy, Judge Fowler granted a Judgment Notwithstanding the Verdict (JNOV) on the issue of the marriage. The bank then indicated that the completed jury charge was a nullity. The JNOV was reversed in March 2007. The only legal document that l have stating unequivocally that I was married was my divorce decree, which was signed in December 2007. The bank had repeatedly told me that they would take no action on the loan until the divorce was final. One representative told me that I was not harmed unless the house was awarded to me. By the divorce date, the loan funds had been advanced more than four years previously. (2nd Supp. CR 43).1 In a later affidavit, Ms. Smith Phillips further explained: Representatives of the bank told me that they could not do anything until the divorce was final. They correctly explained that if the 1 For more information on the tortured history of the divorce case, Ms. Smith Phillips calls the Court's attention to her Brief in Phillips v. Phillips, No. 05-11-01607-CV. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 3property was awarded to my ex-husband, he would be obligated on the note. If the property was awarded to me, I could file suit. (2nd Supp. CR 79, ¶ 11). Ms. Smith Phillips testified that Mr. Phillips promised her that he would pay back the home equity loan, but he failed to do so. (CR 144; 2nd Supp. CR 43-44; 78-79, ¶ 7).2 In 2004, Ms. Smith Phillips sued Mr. Phillips for divorce. Mr. Phillips denied that he and Ms. Smith Phillips were married. On March 9, 2006, a jury returned a verdict that Mr. Phillips and Ms. Smith Phillips had been married at common law since April 27, 1992. (CR 178, ¶¶ 5-6). Ultimately, the trial court divorced Ms. Smith Phillips and Mr. Phillips by Final Decree of Divorce signed December 20, 2007. (CR 176). The trial court awarded Ms. Smith Phillips the marital residence and homestead, 4444 Common Road. (CR 211, item 1). Ms. Smith Phillips filed an appeal of the divorce on March 18, 2008, but after reaching agreements regarding certain deeds, Ms. Smith Phillips agreed to, and did, dismiss her appeal. (2nd Supp. CR 81-87).3 2 This is one of the few disputed facts in this case. Although Mr. Phillips recalled Ms. Smith Phillips' testimony that Mr. Phillips agreed to pay the home equity loan, he disputes that he made such an agreement. (CR 113, ¶ 7). 3 See footnote 1, supra. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 4After the divorce, Ms. Smith Phillips learned that not only was the deed of trust on 4444 Common Road void for lack of her signature, but “that the loan obtained by [Mr. Phillips], without my consent and written agreement, was in violation of the Texas Constitution.” (1st Supp. CR 30-31, ¶ 11). On September 22, 2008, Ms. Smith Phillips filed Plaintiff's Original Petition to Remove Cloud on Title and to Quiet Title. (CR 7). Her trial pleading is the First Amended Original Petition to Remove Cloud on Title and to Quiet Title. (2nd Supp. CR 45) (Tab B). Ms. Smith Phillips sued Wachovia, naming it as successor in interest to World Savings Bank, FSB, as well as three defendants to which Mr. Phillips conveyed 4444 Common Road during the pendency of the divorce proceedings. (See 2nd Supp. CR 44). Wachovia then sued Mr. Phillips as a third-party defendant. (CR 88). Mr. Phillips counterclaimed against Wachovia and cross-claimed against Ms. Smith Phillips. (2nd Supp. CR 62). Wachovia and Mr. Phillips filed a joint motion for partial summary judgment against Ms. Smith Phillips, alleging that limitations barred her suit, that she was judicially estopped from bringing the suit, and that she had ratified the home equity lien. Wachovia and Mr. Phillips later filed a first amended motion for partial summary judgment (CR 98) which was Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 5the live summary judgment motion at the time of the summary judgment hearing. The summary judgment motion, and responses, were: 1. Antonio Robert Phillips' and Wachovia's First Amended Joint Motion for Partial Summary Judgment, filed September 8, 2009. (CR 98). 2. Plaintiff's Supplemental Response to Defendants' First Amended Motion for Partial Summary Judgment, filed November 23, 2009 (2nd Supp. CR 70), which incorporated Plaintiff's Response to Defendant's Motion for Partial Summary Judgment, filed January 21, 2009 (2nd Supp. CR 17). 3. Gillian Smith Phillips' Special Exceptions, Motion to Strike and Supplemental Response to Antonio Robert Phillips' and Wachovia's First Amended Joint Motion for Partial Summary Judgment, filed September 30, 2011. (1st Supp. CR 4). 4. Antonio Robert Phillips' Response to Plaintiff's Special Exceptions, Motion to Strike, and Supplemental Response to Antonio Robert Phillips' and Wachovia's First Amended Joint Motion for Partial Summary Judgment, filed October 11, 2011. (CR 265). After hearing oral argument, the trial court granted the Joint Motion for Partial Summary Judgment by a Memorandum dated October 24, 2011, as follows: Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 6Plaintiff's Special Exceptions and Objections are denied and overruled. Defendant's Joint Motion for Partial Summary Judgment is Granted; Plaintiff's claim is barred by Statute of Limitations, Judicial Estoppel and Ratification. (CR 285) (Tab C). The trial court tried the remaining issues in the case on December 14, 2011. (RR Dec. 14, 2011 passim). Those issues were adjudications of any claims on 4444 Common Road by the sham transferees of the property (Herring Trust, Myrtle Ann Smith and “Smith and Smith” Trust) and what attorney's fees, if any, Mr. Phillips should be awarded in this suit. Herring Trust, Myrtle Ann Smith and “Smith and Smith” Trust did not appear and defaulted. The trial court awarded Mr. Phillips his attorney's fees and declared that neither Herring Trust, Myrtle Ann Smith nor “Smith and Smith” Trust held any interest in 4444 Common Road. (CR 287) (Tab A). This appeal followed. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 7SUMMARY OF ARGUMENT At a time when Mr. Phillips was married to Ms. Smith Phillips, Mr. Phillips obtained a home equity loan on the family's homestead after representing that he was single. Ms. Smith Phillips neither knew about the loan nor later consented to it. Ms. Smith Phillips objected to the home equity loan from the moment Mr. Phillips told her of it. Ms. Smith Phillips later divorced Mr. Phillips. The divorce court awarded Ms. Smith Phillips the homestead. Ms. Smith Phillips filed suit against Wachovia to remove the cloud on her title caused by the void home equity lien and to quiet title. The trial court erred by granting a partial summary judgment on limitations because suits to remove clouds on title caused by void home equity liens are not subject to limitations. Alternatively, only home equity liens that can be “cured” under Article XVI, Section 50(a)(6)(Q), of the Texas Constitution are subject to limitations. The trial court also erred by granting summary judgment on judicial estoppel and ratification because those doctrines cannot create a home equity lien where none existed. In addition, the summary judgment evidence does not support a summary judgment on either judicial estoppel or ratification. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 8ARGUMENT Standard of Review for Issues 1 & 2 A defendant moving for summary judgment on the affirmative defense of limitations bears the burden of conclusively establishing his defense. See Jennings v. Burgess, 917 S.W.2d 790, 793 (Tex. 1996). Unless the summary-judgment record shows as a matter of law that the limitations period passed before Ms. Smith Phillips filed this suit, Wachovia and Mr. Phillips have not met this burden. See Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983). The record must be reviewed in the light most favorable to the non-movant, resolving any factual disputes in the non-movant's favor. See Chambers v. Conaway, 883 S.W.2d 156, 157 (Tex. 1993). Issue 1: The four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien because an equitable proceeding to remove cloud on title and to quiet title is not subject to limitations when a deed is void. Issue 2: Alternatively, the four-year residual statute of limitations does not bar an equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien that is incurable under the “cure” provisions Article 15, Section 50(a)(6)(Q) of the Texas Constitution, although the residual four-year statute of limitations does apply if the void home equity lien can be cured under Article 15, Section 50(a)(6)(Q). Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 9There is no dispute in this case that the home equity lien on 4444 Common Road is void, at least as to Ms. Smith Phillips, because she did not sign a written agreement granting the lien or later consent to it. (CR 112, ¶ 6; 114-43; 1st Supp. CR 28-29, ¶ 5; 29, ¶ 7; 33, ¶ 16; 2nd Supp. CR 78, ¶ 5). In fact, ever since Ms. Smith Phillips became aware of the lien, she has staunchly denied its validity. (1st Supp. CR 29-30, ¶¶ 5-7; 30-31, ¶11; 31-32, ¶ 13; 33, ¶ 16; 2nd Supp. CR 42-43; 78-79, ¶¶ 2, 6-8, 11). The invalidity of the lien is well-established by Article XVI, Section 50(a)(6)(A) of the Texas Constitution. When Mr. Phillips took out the home equity loan in 2002, this section read: (a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for: . . . . (6) an extension of credit that: (A) is secured by a voluntary lien on the homestead created under a written agreement with the consent of each owner and each owner's spouse. The remainder of Section 50(A)(6) includes other requirements. For example, the amount of a home equity loan may not exceed 80% of the fair market value of the home (Section 50(a)(6)(B)), and fees incurred in taking out a home equity loan may not exceed 3% of the amount of the loan Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 10(Section 50(a)(6)(E)). Section 50(a)(6)(Q) provided a mechanism for the homeowner to notify the lender of violations of these provisions. The lender had an opportunity to “cure” those violations “within a reasonable time.” (Section 50(a)(6)(Q)(x)). In 2003, the voters amended Section 50(a)(6)(Q). Act of May 29, 2003, 78th Leg., R.S., S.J.R. No. 42, §1, 2003 Tex. Gen. Laws 6219, 6219. Among other things, the amendment gives the lender sixty days, rather than “a reasonable time,” to cure curable violations such as the 80% rule or the 3% rule. It also spells out the lender violations subject to cure. Section 50(a)(6)(Q)(x) (new subdivisions). The voters further added Section 50(a)(6)(Q)(xi) which reiterates the requirement of Section 50(a)(6) (A) that home equity loans to a married couple may must be “created under a written agreement with the consent of each owner and each owner's spouse.” The new Section 50(a)(6)(Q)(xi) reads: the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the extension of credit is made by a person other than a person described under Paragraph (P) of this subdivision or if the lien was not created under a written agreement with the consent of each owner and each owner's spouse, unless each owner and each owner's spouse who did not initially consent subsequently consents. (emphasis added). The current text of Section 50 is attached under Tab K. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 11Thus, before Ms. Smith Phillips took out the home equity loan in 2002, the Texas Constitution required both spouses to sign off on a home equity loan. In 2003, the voters amended the Constitution to give more detail to the “cure” provisions and to reiterate that the “cure” provisions do not apply to the failure of a lender to require both spouses' signatures at the time of the loan in the absence of later consent by the spouse who had not originally signed. When the non-signing spouse did not originally participate in the home equity loan and never later consented to it, then the loan was void. In this context, Wachovia and Mr. Phillips contend that the fouryear residual limitations period of Tex. Civ. Prac. & Rem. Code § 16.051 bars Ms. Smith Phillips' suit because she filed suit more than four years after Mr. Phillips informed her in 2002 (CR 112, ¶ 6) that he had taken out a home equity loan. In their First Amended Joint Motion for Partial Summary Judgment, Wachovia and Mr. Phillips relied upon a single case to support their contention: Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834 (Tex. App. -Dallas 2008, no pet.). A copy of Rivera is attached under Tab F for the Court's convenience. The Rivera plaintiffs sued Countrywide for violation of Section 50(a) (6)(B), which forbids a lender from making a home equity loan of more Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 12than 80% of the fair market value of the home. The Riveras filed suit more than four years after Countrywide made the loan. The Riveras and Countrywide agreed that the residual four-year limitations period applied to the case. Id. at 839. The issue before the Court was the accrual date of the Riveras' claims. Id. at 839-40. The Court held that the Riveras' cause of action accrued when Countrywide made them a home equity loan. Subsequent courts have cited Rivera as holding that the four-year residual limitations period applies to suits brought under Section 50(a)(6) (Q). E.g., Reagan v. U.S. Bank Nat'l Ass'n, 2011 U.S. Dist. LEXIS 115873, at 8-9 (S.D. Tex. Oct. 6, 2011); Schanzle v. JPMC Specialty Mortg. LLC, 2011 Tex. App. LEXIS 1748, at 10 (Tex. App. -Austin Mar. 11, 2011, no pet.). Various courts have applied the residual four-year limitations period to Constitutional violations that can be cured by the lender. In addition to the above, these decisions include Belanger v. BAC Home Loans Servicing, L.P., 2011 U.S. Dist. LEXIS 151554 (W.D. Tex. Dec. 9, 2011); Blodgett v. BAC Home Loans Servicing, L.P., 2012 U.S. Dist. LEXIS 1524 (E.D. Tex. Jan. 6, 2012); Boutari v. JP Morgan Chase Bank, N.A., 2010 U.S. Dist. LEXIS 144094 (W.D. Tex. June 10, 2010), aff'd mem. 429 Fed. Appx. 407; 2011 U.S. App. LEXIS 12539 (5th Cir. June 20, 2011) (per curiam); Hannaway v. Deutsche Bank Nat'l Trust Co., 2011 U.S. Dist. LEXIS 24775 Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 13(W.D. Tex. Mar. 11, 2011); Johnson v. Deutsche Bank Nat'l Trust Co., 2010 U.S. Dist. LEXIS 126912 (S.D. Tex. Dec. 1, 2010); Priester v. Long Beach Mortg. Co., 2011 U.S. Dist. LEXIS 142031 (E.D. Tex. Oct. 12, 2011); Sierra v. Ocwen Loan Servicing, LLC, 2012 U.S. Dist. LEXIS 19448 (S.D. Tex. Feb. 16, 2012); and Williams v. Deutsche Bank Nat'l Trust Co., 2011 U.S. Dist. LEXIS 24767 (W.D. Tex. Mar. 11, 2011). In contrast, Santos v. CitiMortgage, Inc., 2012 U.S. Dist. LEXIS 43769 (N.D. Tex. Mar. 29, 2012), approving, in part, Findings and Recommendation of Magistrate Judge, 2012 U.S. Dist. LEXIS 43775 (Feb. 7, 2012), held that the four-year residual limitations period does not apply to suits bought for Constitutional violations that can be cured. The curable violations in Santos were lending in excess of 80% of the home's fair market value and charging fees in excess of the 3% limitation. A copy of Santos is attached under Tab G for the Court's convenience. Santos relied upon Smith v. JPMorgan Chase Bank, N.A., 825 F. Supp. 2d 859 (S.D. Tex. 2011), in which the court declined to apply the four-year limitations period to a Constitutional violation that could not be cured: Making a home equity loan when there already was a home equity loan secured by the home in question. A copy of Smith is attached under Tab H for the Court's convenience. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 14Both Santos and Smith reviewed the text of Tex. Civ. Prac. & Rem. Code § 16.051, which reads in full as follows: Every action for which there is no express limitations period, except an action for the recovery of real property, must be brought not later than four years after the day the cause of action accrues. Both courts observed that the clause “except an action for the recovery of real property” excepted suits to remove cloud on title and to quiet title – such as this one – from the four-year residual limitations period. Moreover, as both courts recognized, Texas courts have long held that “an equitable action to remove cloud on title is not subject to limitations if a deed is void or has expired by its own terms.” Ford v. Exxon Mobil Chemical Co., 235 S.W.3d 615, 618 (Tex. 2007) (citing Watson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783, 785 (Tex. 1941); Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 309 (Tex. 1923)). The parties' agreement in Rivera has led other courts into error to the extent that those courts have applied a four-year statute of limitations to suits based on violations of Section 50(a)(6)(Q), relying on what they viewed as a holding by this Court that the four year residual statute applies. The Court should follow Santos and Smith by holding that the residual four-year limitations statute does not apply to suits based on violations of Section 50(a)(6)(Q). Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 15Alternatively, the court should adhere to the four-year statute of limitations for suits alleging curable violations of Section 50(a)(6)(Q) – such as the 80% rule or the 3% rule – but decline to apply that statute to Constitutional violations that cannot be cured. Such a ruling would be consistent with Smith, supra, where there already was an existing home equity loan. It would also be consistent with Boutari, supra, where the Western District of Texas permitted lenders to “cure” their lack of authorization to make home equity loans in Texas by subsequently becoming authorized. The court recognized that its reasoning could not apply to the situation when one spouse refuses consent: Plaintiffs finally contend the reasoning of the Magistrate Judge is absurd because, according to plaintiffs, it would allow lenders to unilaterally cure a home equity loan to which one spouse refuses consent. The Magistrate Judge did not conclude that all obligations under section 50(a)(6) can be cured unilaterally, only that all such obligations can be cured as stated in Doody. In such instances, the authorized lender requirement can be cured unilaterally because, unlike other requirements such as spousal consent, it does not require the borrower to do anything. Boutari, 2010 U.S. Dist. LEXIS 144094, at 40. So ruling would result in reversal of the summary judgment in this case because Wachovia cannot cure the fact that it did not obtain Ms. Smith Phillips' written acknowledgement or consent to the home equity loan. (CR 112, ¶ 6; 114-43; 1st Supp. CR 28-29, ¶ 5; 29, ¶ 7; 33, ¶ 16; 2nd Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 16Supp. CR 78, ¶ 5). Finally, it would be consistent with Doody v. Ameriquest Mort. Co., 49 S.W.3d 342 (Tex. 2001), where the Texas Supreme Court stated that the purpose of Section 50(a)(6)(Q) is to allow lenders to “have a reasonable opportunity to cure mistakes.” Id. at 346. Under either alternative, the home equity loan encumbering Ms. Smith Phillips' home can be attacked in this equitable proceeding to remove cloud on title and to quiet title because that home equity lien is void and cannot be cured and is, therefore, not barred by the residual fouryear statute of limitations. The Court should, accordingly, reverse the trial court's partial summary judgment to the extend that it is based on limitations. Standard of Review for Issues 3 & 4 Summary judgments are subject to de novo review. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The evidence presented in the motion and response must be viewed in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 208 (Tex. 2002). The party Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 17moving for traditional summary judgment bears the burden of showing no genuine issue of material fact exists and it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); see also Knott, 128 S.W.3d at 216. Issue 3: The trial court erred by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on title and to quiet title when title to a homestead is clouded by a void home equity lien because a void home equity lien cannot be “estopped” or “ratified” into existence. Wachovia and Mr. Phillips assert that a valid home equity lien exists under the doctrines of judicial estoppel and ratification. However, the Texas Supreme Court has squarely held that a homestead lien “cannot be 'estopped' into existence.” Hruska v. First State Bank of Deanville, 747 S.W.2d 783, 785 (Tex. 1988). In Hruska, a married couple (the “Hruskas”) obtained a construction loan from First State Bank to build a house. No one prepared or filed a mechanic's and materialman's lien prior to the date that materials were furnished and improvements constructed. See Tex. Const. Art. XVI, § 50(a)(5). The omission was discovered when the Hruskas sought permanent financing. To resolve the problem, the Hruskas and First State Bank signed an agreement but backdated it to a date prior to materials being furnished or improvements begun. The Hruskas later defaulted on the loan. First State Bank sued them, alleging that the Hruskas had misrepresented to First State Bank Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 18“that they would prepare the paperwork necessary to secure the loan.” Id. at 784. A jury returned a verdict in favor of First State Bank. In accordance with that verdict, the trial court imposed an equitable lien against the Hruskas' homestead. The court of appeals upheld the trial court.The Texas Supreme Court reversed: In affirming the trial court's judgment, the court of appeals held that the Hruskas were estopped to deny the validity of the lien imposed by the trial court. The court apparently reasoned that the alleged misrepresentations by the Hruskas could create an equitable lien and could additionally estop the Hruskas from denying the lien's validity. This reasoning is faulty. A lien on a homestead can be created only in the manner set out in the Constitution. The constitutional requirements for the creation of a lien against the Hruskas' homestead had not been complied with at the time of the misrepresentations. Consequently, there was no existing lien. The fact that the Hruskas may have promised to execute a lien in the manner mandated by the Constitution and then failed to do so, does not change the fact that no such lien was prepared. A lien cannot be "estopped" into existence. It is true that we have held that, in certain circumstances, a homestead claimant may be estopped to deny the validity of an existing lien. Lincoln v. Bennett, 156 S.W.2d 504, 505 (Tex. 1941). However, Lincoln is not authority for the proposition that a lien may be created by oral representation, as First State Bank attempted to do here. The function of waiver or estoppel is to preserve rights, not to create independent causes of action. Southland Life Insurance Co. v. Vela, 147 Tex. 478, 217 S.W.2d 660, 663 (1949). Waiver and estoppel are defensive in nature and operate to prevent the loss of existing rights. They do not operate to create liability where it does not otherwise exist. Jones v. Texas Gulf Sulphur Co., 397 S.W.2d 304, 307 (Tex. Civ. App. -Houston 1965, writ ref'd n.r.e.). Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 19First State Bank had the burden to prove that a lien existed. Only after that burden was discharged could there have been a basis to support a claim of waiver or estoppel. See, Southland Insurance Co. v. Vela. In this case, the false statements or promises allegedly made by the Hruskas could not create a lien. They could only serve to estop the Hruskas from contesting the validity of an existing lien. Since there is no evidence that the Hruskas made any misrepresentations regarding an existing lien, there is no basis for the application of principles of estoppel. The trial court erred in imposing a lien on the homestead, and the court of appeals likewise erred in failing to remove it. Id. at 784-85 (emphasis in original). Accord, Kepley v. Zachry, 116 S.W.2d 699, 701 (Tex. 1938) (“Nor can the failure to comply with the requirements of the law be waived, or ratified, by any contract made after the material is furnished or the labor done.”). See Gulley v. Countrywide Home Loans, Inc., 436 B.R. 878, 887-88 (Bankr. N.D. Tex. 2010) (neither waiver, estoppel nor ratification can validate an otherwise invalid home equity lien); Chambers v. First United Bank & Trust Co., 419 B.R. 652 (Bankr. E.D. Tex. 2009) ( same). For the Court's convenience, copies of Gulley and Chambers are attached under Tabs I and J, respectively. As previously discussed in this Brief, the Texas Constitution does include “cure” provisions which apply when both spouses join in taking out a home equity loan. When, for example, a lender charges a borrower a fee of more than three percent of the loan, the home equity lien is invalid Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 20unless the lender cures its error within sixty days of being notified of it. If the lender cures its error, then the home equity lien is valid. Doody v. Ameriquest Mort. Co., 49 S.W.3d 342 (Tex. 2001). In circumstances such as those, “lenders have a reasonable opportunity to cure mistakes.” Id. at 346. But the failure of Wachovia to require Ms. Smith Phillips to agree to and sign off on the home equity loan is not a “mistake” that Wachovia can “cure.” Moreover, as also previously discussed, the Texas Constitution expressly provides that a home equity lien is invalid, regardless of the “cure” provisions, when a spouse did not participate in the home equity loan or later consent to it. In short, no home equity lien on 4444 Common Road ever has existed because Ms. Smith Phillips did not even know about the home equity loan when Mr. Phillips took it out, let alone sign any of the paperwork accompanying the loan or later consent to the loan. (CR 112, ¶ 6; 114-43; 1st Supp. CR 28-29, ¶ 5; 29, ¶ 7; 33, ¶ 16; 2nd Supp. CR 78, ¶ 5). The later claims of Wachovia and Mr. Phillips would accomplish exactly what the Texas courts have forbidden: Use of defensive legal principles to create a lien where none existed before. For these reasons, the trial court erred when it granted Wachovia and Mr. Phillips a partial summary Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 21judgment based on their contentions that Ms. Smith Phillips is judicially estopped from denying the validity of the lien or that she ratified it. Issue 4: Alternatively, the trial court abused its discretion by granting partial summary judgment that judicial estoppel and ratification foreclose this equitable proceeding to remove cloud on title and to quiet title because the summary judgment evidence does not support a finding of judicial estoppel or ratification. Wachovia and Mr. Phillips base their claims of judicial estoppel and ratification on the same evidence. That evidence consists of the following: 1. In the divorce case, Ms. Kroupa signed a sworn Inventory & Appraisement on July 30, 2007, which included this entry under the community liabilities (CR 149): Property: 4444 Common Rd. Dallas, Texas Lienholder World Savings Balance $145,674.95 2. In Exhibit A to that same Inventory & Appraisement, Ms. Smith Phillips listed the property thus: [graphic omitted, lists 4444 Common as owned by Smith and Smith Trust, valued at $248,000 and subject to secured debt of $145,674.95] (CR 153). 3. In his summary judgment affidavit, Mr. Phillips swore: On April 4, 2008, Plaintiff testified, under oath, in my presence, and in open court, that she agreed to be bound by and comply with every Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 22term and condition set forth in the Decree of Divorce entered on December 20, 2007. (CR 113, ¶ 8). Mr. Phillips believes this testimony to be important because the Final Decree of Divorce – which was not an agreed decree -orders Ms. Kroupa to make timely payments to “World Savings and assigns” on the home equity loan. (CR 182-83). The hearing Mr. Phillips describes is the one where Ms. Smith Phillips and Mr. Phillips made agreements regarding certain deeds in consideration of which Ms. Smith Phillips dismissed her appeal of the divorce case.4 See 2nd Supp. CR 81-87 (partial Reporter's Record from that hearing). 4. Mr. Phillips next points to “Gillian Smith Phillips' Report to the Court” (CR 238) in which, in response to the divorce court's order, Ms. Smith Phillips reported that on March 31, 2008, she made a payment of $2,339.42 to Wachovia. (CR 240). Mr. Phillips conceded that Ms. Smith Phillips made no further payments to Wachovia. (CR 113, ¶ 10). The Texas Supreme Court most recently discussed the doctrine of judicial estoppel in Ferguson v. Building Materials Corp., 295 S.W.3d 642 (Tex. 2009). In that opinion, the Court explained: 4 See footnote 1, supra. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 23Judicial estoppel precludes a party who successfully maintains a position in one proceeding from afterwards adopting a clearly inconsistent position in another proceeding to obtain an unfair advantage. Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008). Accordingly, a party cannot be judicially estopped if it did not prevail in the prior action. See Long v. Knox, 155 Tex. 581, 291 S.W.2d 292, 295 (Tex. 1956). The doctrine is not intended to punish inadvertent omissions or inconsistencies but rather to prevent parties from playing fast and loose with the judicial system for their own benefit. Pleasant Glade Assembly of God, 264 S.W.3d at 7. Id. at 643. Judicial estoppel cannot be supported on this record: First, it cannot be said that Ms. Smith Phillips “maintained a position” in the divorce case – she simply reported on her Inventory & Appraisement the amount of the lien that Wachovia asserted, as is required by law. (CR 149, 153). There is no evidence that Ms. Smith Phillips sought to acquire 4444 Common Road in the divorce. What evidence does exist in the record suggests that Ms. Smith Phillips neither took a position nor knew what the divorce court would do: Ms. Smith Phillips testified, “One (Wachovia) representative told me that I was not harmed unless the house was awarded to me.” (2nd Supp. CR 43). Ms. Smith Phillips also testified: The inventory reflects that the homestead has a lien placed there by Antonio Robert Phillips. If the property has been awarded to my ex husband, the lien would have been valid. At no time did I agree that Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 24I would not pursue my legal rights to have a court find that the Deed of Trust is invalid as to me. (2nd Supp. CR 79, ¶ 8). There is no summary judgment evidence that Ms. Smith Phillips “maintained a position” with respect to 4444 Common Road in the divorce. Second, Ms. Smith Phillips has not maintained a “clearly inconsistent position” in this case. In fact, her position is the same as it was in the divorce court: As soon as she learned of the existence of the home equity lien, she complained of it and considered it invalid. (1st Supp. CR 29-30, ¶¶ 5-7; 30-31, ¶11; 31-32, ¶ 13; 33, ¶ 16; 2nd Supp. CR 42-43; 78-79, ¶¶ 2, 6-8, 11). Third, Ms. Smith Phillips does not seek to obtain an “unfair advantage” in this litigation but only to exercise her constitutional right to attack a void lien on her homestead. Again, the summary judgment evidence shows that Ms. Smith Phillips objected to the home equity lien from the outset. (Id.). To prevail on this argument, Wachovia and Mr. Phillips would have to persuade this Court, at a minimum, that had the lien balance of approximately $145,000 on 4444 Common Road not existed (CR 114-15), the trial court in the divorce case would have awarded half its value -Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 25$72,500 -to Mr. Phillips in order to equalize the trial court's division of a substantial community estate that included equity in real estate alone of $4,178,759. (CR 146). That position is speculative and implausible, especially given the Texas Family Code's command that a divorce court make a “just and right” division of a couple's community property which need not be and often is not in equal shares. Tex. Fam. Code § 7.001; e.g., Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996) (per curiam). The case for ratification also fails. Wachovia and Mr. Phillips cite Kunkel v. Kunkel, 515 S.W.2d 941 (Tex. Civ. App. -Amarillo 1974, writ ref'd n.r.e.), for the definition of ratification: Ratification may be said to be the adoption or confirmation by a person, with knowledge of all material facts, of a prior act which did not then legally bind him and which he had the right to repudiate, but which, by the ratification, is given retroactive effect as if originally performed by him. Id. at 948. First, Ms. Smith Phillips did not have knowledge of all material facts, just that Mr. Phillips had obtained a home equity loan and promised to pay it back. In fact, her testimony was that she thought the home equity lien invalid because she had not signed it but learned, after the divorce, that the home equity lien also violated the Texas Constitution. (1st Supp. CR 30-31, ¶ 11). Moreover, Ms. Smith Phillips' summary judgment evidence is that she denied the validity of the home equity lien from the Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 26moment she learned of it. Ms. Smith Phillips did not ratify the home equity lien. (1st Supp. CR 29-30, ¶¶ 5-7; 30-31, ¶11; 31-32, ¶ 13; 33, ¶ 16; 2nd Supp. CR 42-43; 78-79, ¶¶ 2, 6-8, 11). The summary judgment evidence does not support the partial summary judgment to the extent that the partial summary judgment is based on judicial estoppel or ratification. The Court should reverse the partial summary judgment. Prayer for Relief WHEREFORE, PREMISES CONSIDERED, Appellant Gillian Smith Phillips prays that the Court reverse the district court's Final Order, including its Memorandum, and remand this case for further proceedings. Ms. Smith Phillips prays for general relief. Respectfully submitted, ___________________________________ Jimmy L. Verner, Jr. Texas Bar No. 20549490 Verner & Brumley, P.C. 3710 Rawlins St. Suite 900 Dallas, Texas 75219 Attorney for Appellant, Gilliam Smith Phillips Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 27Certificate of Service I certify that I have served a true and correct copy of the above and foregoing document on the following person: John M. Ledyard 600 E. John Carpenter Frwy. Suite 125 Irving, Texas 75062 972.812.9400 972.812.9408.fax Counsel for Wachovia Mortgage Corporation Clint Westhoff GoransonBain 8150 N. Central Expressway Suite 1850 Dallas, TX 75206 214.373.7676 214.373.9959.fax Counsel for Antonio Robert Phillips by email and by facsimile on this 3rd day of July, 2012. ___________________________________ Jimmy L. Verner, Jr. Appellant's Brief – Phillips v. Wachovia Mortgage Corp. -page 28

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